CBN plans payment service banks with N5bn capital requirements
Central Bank of Nigeria (CBN) is planning to introduce and license Payment Service Banks (PSBs) in the country with a minimum capital requirement of N5 billion.
The Capital Adequacy Ratio (CAR) (capital/risk-weighted assets ratio) for the PSBs is fixed at 10 per cent, while they are required to maintain not less than 75 per cent of their deposit liabilities in treasury bills and other short-term Federal Government debt instruments at any point in time.
The reason for the new phase of payment banking is to promote financial inclusion and enhance access to financial services for the low-income earners and the unbanked segment of society through leveraging technology.
In a circular to all banks, telecommunication companies, mobile money operators, banking agents and Nigerian Communication Commission (NCC), signed by Kevin Amugo, director, financial policy and regulation, the CBN on Friday issued an exposure draft guideline for licensing and regulation of payment services banks in Nigeria for comments.
The key objective of setting up payment services banks is to enhance financial inclusion in rural areas by increasing access to deposit products and payment/remittance services to small businesses, low-income households and other entities through high-volume low-value transactions in a secured technology-driven environment.
The payment service banks are going to operate mostly in the rural centres and unbanked locations, with not less than 50 of physical access points in rural areas as defined by the CBN from time to time.
They are to establish ATMs in some the areas and be at liberty to operate through banking agents.
Also, they are expected to use other channels including electronic platforms to reach out to their customers, establish coordinating centres in clusters of outlets to superintend and control the activities of the various access points and banking agents, among others structures.
The payment service banks are allowed to maintain savings accounts and accept deposits from individuals and small businesses, which shall be covered by the deposit insurance scheme.
However, they are not allowed to grant any form of loans, advances and guarantees, trade in the foreign exchange market, issue underwriting, establish a subsidiary, and undertake any other transaction not prescribed by the guideline.
Eligible promoters include banking agents, telcos, through subsidiaries, retail chains (supermarkets), mobile money operators that desire to convert to PSBs are expected to comply with the requirements of the guideline.